[inaudible conversations] >> good afternoon everybody. welcome to the but - - the book launch. talking about the of book windfall. now a professor with that

security energy project there. for iraq and afghanistan and has been working on this book for several years and why he decided to write the book. >> thanks for spending your time with us. looking at this intersection with energy so thank you very much for that. bringing back directly to iraq but after my time how

the world needs to be understood by the foreign policy lands. from that time i was working in government from the form policy perspective in to meet those saudi officials and i tended to look at that. that seems to be working now. i cannot take any credit for that. we saw the saudi resistance to the regime in baghdad clearly that was some of it with that crisis we can fully appreciate the high eight whale prices they had

no rivals in that department becoming challengers 12 million barrels a day eventually and from that the need to look at a foreign policy lens. >> at that point there wasn't all energy windfall. >> what do you mean by the windfall?. >>. >> i wanted to call the book originally serendipity not a lot of people at simon & schuster like that name over

the promise over the last 10 years moving from a world that was formed by energy scarcity to a reality of energy for those energy production is as surprised and the challenge in the book is understanding how this has reshaped global affairs and how we can take advantage to maximize. >> is a powerful motion to decline?. >> get that the reality of a lot of americans see the linkage between energy and

foreign policy and there is still lot of misunderstanding. they are expecting a club liberation from the lease term politics there are benefits they are just more subtle requiring more from the energy market and the anecdote is how this energy boom has lost power for the united states and when we had energy scarcity with chinese and russians but 10 years later there is more of a debate particularly in china. >> but there is a question mark.

and with people around the of world with that significance so let me take the part of they perceive that that americans are becoming aware of the fact it is an asset more than a folder ability looking around the room working under the assumption with vulnerabilities connected change dramatically in the last year. with those strategic benefits to people understand more it could be good for jobs or the economy and i acknowledge that in

the book but try to underscore how this has changed the strategic environment. >> somebody said though whole shale boom was the biggest sense of financial collapse. >> there has been millions of jobs but of course, they have ebbed and flowed id number. with those places that were booming but overall the benefits to the economy were even greater for that supplemental that was passed in terms of sheer numbers. one of their prominent democratic candidates.

>> guessing games. >> el also stops tracking. so if though windfall continues if there was an effort?. >> i know you are sympathetic it has went through many iterations focusing on how to anticipate a price collapse. so at one point riding with that challenge to sustain in the political realm could be a push that would be to a

severe restriction. up my argument tries to make people think about the cost benefit analysis inc. strategic games as well as economic ones. it would be a significant reversal of america and for transfer -- fortune. because there are concerned to. >> as a highly regulated activity. me be counter intuitive you advocated more state regulation is a little lucky >> so who could be be that

way? so it isn't just on fracking but what is the right level of regulation? we will continue to see a debate who are the right regulators? there are certain issues that make more sense on the federal level of cost state border implications may be methane emissions but others that make more sense that the state level with the capacity to do that. a lot of the effects we are now looking at like the potential of chernobyl the local risk and the fact and communities to regulate or figure out that level of risk. >> so now with the geopolitics if you have

upheaval or war in the mideast all of these conflicts of russia isn't affecting the price. >> in the context of writing this book before the price collapse to the presence of mind to say it has done so on interesting to become divorced from the energy markets this was after the arab spring were the most ball a title politics in region over decades but the price was not affected i do not think they have decoupled but the world has a lot more excess supply to absorber shot better than otherwise for but that doesn't mean geopolitics will not still we a big issue and i would anticipate

begat venezuela together with those of a certain moments that could be a significant restriction i don't expect you would write off geopolitics. >> to get more specific on geopolitics how has the windfall in your view changed u.s. relations?. >> here is where my answer tends to disappoint a lot of people. many of us who have worked on the middle east to have more distance from those problems that if we're not importing whale than that will give us the opportunity . and then it goes back to the first question if we look at

the world but only a foreign policy lessons it is much harder to make that perfect. we are not energy independent and with those global market. so if something happens in the middle east that will affect americans because of price that the pond is determined internationally. that said i don't think it is nothing that changes so for someone to understand this if you are preparing a president or a senior official fairly certain things you can talk about. for saudi arabia and many countries and is a need to

be high on the list. so the nature the 10 or of the relationship has changed. >> how do they see this windfall? with that commitment to the region?. >> in many parts of of world. and perception is reality so there has been a sense of bin talal recently that ameritech is disengaging from that part of the world and many seniors would say because you don't need our oil anymore.

so did is of perception even f. with the analysis of the facts to intertwined interest. in looking at our involvement that they will be less invested but they're becoming more independent. >> generally i would say so we do as of the non energy interest. the reality is we will continue to be interested and invested in the middle east for a long time to come

>> does seem counterintuitive how it possibly make the mideast and more important source of oil?. >> this is the value of foreign policy. there are many scenarios to play out. where the energy markets could be in the future from a long period of time. it could be that in some ways then outside of the gulf that our no longer producing. but more oil that the world is consuming. see you actually could find a situation so it has more

influence on global politics. >> so with your previous book about shale oil. >> so that situation in the united states for that made it easier for distinctions. >> it isn't the coincidence but then libya thinks the

price is no big deal because it is slow but they could get support for that in the high price environment and they do that by going around the world and they could make the case for girl in looking at the american energy sector. but ameritech has produced another 1 million barrels per day adding to the worldwide market. and those that would normally be in place to talk about significant quantities of oil in the oval economic recovery was very fragile. when he was talking about

sanctions in the white house tuesday keep in mind we have a situation. >> you mention those newest sanctions are russia. and there is controversy in some ways in the storer controversial mandate big departure with the prerogative away from the executive branch and giving back to congress. >> talk about how they took a back. >> so basically there is a

waiver so the fact there is a movement in congress to make it mandatory. with that secretary of state that this particular moment but not in the national security interest. so to say this will upset the relationships with the europeans the for a waiver could be used with that requirement to act on before the action can be lifted. headed a generic problem with sanctions may be to

maximize the impact on the country but that is to create an environment of you want that negotiator who is in charge of the relationship and that is effective bin other circumstances. with that normalization and essentially this piece of legislation and it would be harder shorter of a capitulation. >> working on iran. >> what do you mean by

working? does a change russian behavior? said of the evidence of that. in that regard they have not had the desired effect. but if the objective is punitive there has been some punitive defect. -- effect, not just now that the ability to get financing but in financing for the future. having to do with technology that could be part of their supply in the future. >> sold to other people talk about describing the u.s. energy position with dominance.

what is your reaction?. >> i should learn from you that you never mentioned any one in particular. energy dominance in some ways is right to a knowledge to think about a strategic tool and a way that the concept has been developed it sounds like a zero sum game but first it is quite simple that the focus and then the mind that is the appropriate. but in today's world there is no denying it and cut

energy superiority needs to include other forms as well. so china is talking about for those that missed petroleum with those strategic benefits and we risk losing that but the real critique of energy dominance that just on production if we are looking at trying to create a policy or strategy not just looking at production the non energy form policy with that

position on trade. looking at the policy toward mexico that that could backfire and have implications. and taking advantage of the strategic environment and the changes made in a non energy rome. and that a real strategy. >> how does that change the u.s.-china relationship? with the discussions of mexico?. >> i am aware we will have a difficult relationship for the foreseeable future. and concerned citizens and

everyone else. we can build little islands of cooperation. but there are many ways in the new energy environment and we are happy to expand on this. but this energy abundant environment opens the space for china to be more comfortable in the current international order. so it can live within it? also to create a real opportunity and that is one of the casualties moving on

from the paris accord and we had a credibility from a shift of the missions to get in there to negotiate with china and with that paris accord. but going back to the middle east there is a great opportunity for the u.s. and china at to work more closely but it would be useful. >> how does energy fit into this? now with mexico?. >>. >> energy is important that is often overlooked how integrated in terms of energy.

that mexico is the largest importer of america's natural gas that will likely grow very significantly if mexico continues energy reform. and then to be tied to prospects of economic growth that they have up until this point decided we have marron natural gas is cheaper and available we will build a pipeline and encourage that integration. so if we go to that negotiation there are huge elements that could be lost. in the since to say working for an international energy company it might take you 36

hours anywhere -- to get from north america to mexico. it could be exponentially longer. may be coming from argentina. so that type of seamless interaction to natural gas and then all of these things could be lost if we head down a more confrontational road. >> one more question. is their energy geopolitics dimension with issues with north korea?. >> sure. is interesting in this difficult situation where

the options are attractive metadata diplomatic answer to the crisis with that attractiveness or the military option there are a lot of parallels people say we could deploy that iran's strategy on north korea to bring them to the table and energy is a big part of that. tune the extent it has links with with the economy. so that the analogy with the iran is of limited use. there is snowden limited mechanism so sanctions created pressure that led to rouhani election then he led

a man to man the gate -- negotiate. there isn't anybody in north korea. but second there is a lot of interesting work that will substitute of the technology. >>. >> they do have that capability especially with the coal exports. i know if they could easily do that so there is the energy to mention -- a dimension that that is not the answer. >> please ask questions state your name and affiliation and give a

question not a speech. >> congratulations. i look forward to reading it all. my question is it seems to me this really doesn't have some much do with energy as it does with the above ground factors with way of life the business system or baker silone's so do see evidence around the world that you are looking through the lens? can we reform our political and economic and social system? to say this

is a lever for strategic advantage for the broader concept and using energy as a broader window?. >> thanks for coming today. is a great question i would agree entirely with the promise it isn't just about geology but the institutional environment all of these are critical in the energy oh. there were a lot of countries that were optimistic about their ability to replicate. only a couple of other countries are producing commercial quantities. it has been very hard for them to reproduce this. but from the geopolitical bit this is something we

could use to the entry point to the conversation around the world. so the state department's and they try to respond tell us how you wrote your laws. or those institutional factors and to live along but there wasn't funding. there was nervousness in the obama administration with these fossil fuels' overseas. >> and then to have the global shale gas initiative. >> it could have been more and the potential is still there going back to the idea

of soft power that only for america to help other countries but gives a seat at the table. transparency and rule of law and anti-corruption and not sound like you are lecturing . here are some of the of variables that are required. sova of budget cuts and the state department would further degrade that capability. >> they queue for this terrific talk. with the issue of china

their goal to phase out combustion engines what does that mean?. >> the assistant minister said actually we disagree with you totally. >> them would like to hear his views it is still unclear whether china will end up on this but this debate of china calling an end to petroleum. but to say 2040 we will no longer sold these kinds of cars they already have a policy initiative and then

china matters a lot more for those automobile markets so the significance there what is driving this? there were environmental concerns and in china that is partially the case also a recognition that there can be strategic advantage to be a leader with the technologies. think about france and potentially china. this is the finite gravy train. and said to a couple of people today what questions are people asking me? 2014 what is the break-even price

on shale? that was critical but last year all questions were about electric vehicles . the nature hases change. there is that expectation that it will come so that change in mind set and change those behaviors as well. >> so talk about the chinese car. not just a leader in technology but perhaps with the electric cars with those international competitors. >> that was misleading.

but that could be a hybrid in my friend with one charge has a car can get 14 miles. >> am with economic growth with those willow producing countries from the seeds to corruption and that gaining sectors stability. from the council of foreign relations with shell and other things witted is no way to think about that.

>> we're still exporting. >> first come on a the u.s. i do get questions is it subject to dutch disease? that this is a very large industry and there are many other sectors. and that those same that you have reference to other parts of the world. so one of the most interesting things to watch with those goals countries like saudi arabia in particular. so those reform efforts we

have seen conceptualized and began to be implemented would never have happened without the shift of energy. it is that there is more energy on the market as i describe in detail in the book but shale oil introduced a new business model which made it hard for those markets to work in the same way as before. >> and with that new market world so there's still resources. it is very real. to meet with the crown prince or other people you get the sense that they understand it is imperative

if they are going to survive . but there is a seriousness we have not been there before. >> nice to see you. en to detract from the ability. with those environmental terms would be very expensive. >> with that debate with the obvious points and natural gas is a substitute for renewable as well as coal so that that we have to take that into account so maybe

renewals may have been seen very low natural gas. in the foreseeable future. however if you look at the statistics of renewable energy investment. even with low natural gas prices in there is policy and their end then attribute that. that is the way thatis a complement to a lot of renewals. >> with that interagency. there has been no precipitous applying --

decline. and from 2016 is very powerful. in those mandatory requirements for renewals. >>. >> with an asset to liability so why 100 percent agreed it is a huge benefit that is a massive energy importer. but what i am struggling with with the asset the u.s. is still a net importer of energy the largest in the world and will carry-on in

the 20 thirties'. so i don't know how this is an asset. >> is this in a financial or strategic term?. >> and with that liability to be neutralized but still a net importer of energy to still carry-on wheel for many years to come. >> they have gone net 60% to 21%. >> thanks for getting those statistics out there.

en to elaborate but many in the foreign policy community say can we use energy exports to punish adversaries? and then to talk about natural gas to displays russian exports to europe in their natural they looking for something very tangible. so the proponent is more in the realm of changing the strategic environment. so it is less of the sense we can use exports but

that's an offense -- in effect is augmenting sources of power is in a variety of ways to put a the market have the appreciable benefit to let america in a better position to levant's interest. >>. >> so the impact of innovation has been a disaster in that impact of the innovation has been

slower than expected. what do you think will happen?. >> this is a question that i demand. [laughter] is interesting reading national intelligence every four years and 2008 it talks about the coming energy transition it is all about the renewal will space where things are already happening at that point so to put a big question mark around this. so my sense there is still technological advances so if

we're at the end of an ad at all to be covered and have an impact on our ability of others. >> that will eventually come to a halt but the technology moves much more slowly but then quickly than you expect for girl so tell me the rate of the sectors would switch i would complete the believe that.

if we are sitting here in 10 years we might be talking with the geopolitics of renewable energy. is an interesting space if you agree with the president that it affects global politics were moving to that level energy future and that is an area ripe for investigation. >> whatever happens to that federal spending with those alternative technologies. but that technology innovation pathway can have momentum there.

as to which those faster i don't know but renewable solar has benefited it greatly. but m.i.t. energy initiative with a they have done more than anything else and it is solar. in that innovative ever. >>. >> but there were a lot of incentives built electric car is virtually free.

>> i think there were some questions on this side? that. >> i a from the international center. thank you for the booked thank you for your research so continuing on. with those opportunities in the advanced energy economy moving towards electrification. and emerging from energy poverty from the different mechanisms with those renewable sectors also including nuclear what d.c. for the emerging advanced energy markets?. >> at the renewable energy

markets talk about how we unexpectedly find ourselves in the other sectors. >>. >> so i the renewable side a really do think there will be geopolitical decisions. then you feel like you are in a room. and then what is the

resistance? wide you say bad things about renewals? and then about a change in politics there is a huge potential that have not invested into infrastructure already sewed to leapfrog over that that is that net benefit to think about in the world relying on renewal energy and the agency they have done a scenario is that could be run on renewable energy.

so that is interesting what does global politics would like? it is a global economy that is so electrified. if you think about cybera lot of these are even more important in day are today. keep in mind because something is electrified doesn't mean it is better for the environment. if it is worse for the environment if it is nuclear or renewable or natural gas it is beneficial. >> talk about that 70 percent because about 82 percent is hydrocarbons so that would be a big shift >> a dramatic shift.

>> i am a large private equity investor so my question on windfall that you are discussing extends to the lead states rust belt you have the natural gas boom that can have those industrial centers could that be the former rust belt ?. >> yes. andy then in your state that since fracking as a big boost to the rest held manufacturing and those that

resulted from that. and that supply chain side from a couple million jobs but also in ohio and michigan. >> to be completely consistent it isn't just production but the lower natural gas price to a competitive edge in manufacturing. and maybe we have seen in southern german companies invest in the united states. >> with that new investment of manufacturing in the u.s. as a result of what that came from.

even chinese companies. >> you have not touched on cold so of that has a future that budgets may reduce it in terms of renewal? so in that horizon that creates that oxymoron. >> i am still waiting for this clean coal. . .

not phaseed out around the world. still places where they're ramping up because they have such enormous energy gaps. so, coal in the united states, despite the efforts of the current administration, wouldn't say there's a big future here because i think natural gas,

we're looking at future of -- long future of low prices for natural gas, and a variety of other factors which are going to continue to make it preferred fuel, but in other part offed the world it's still an open question. >> we have covered a vast part of the world whole host of issues in which energy and geopolitics enter act. realize the only one we left out is the question of u.s. lng versus russian gas in europe but we'll have to leave that for next time. megan, thank you for writing this terrific book and thank you for a terrific discussion. >> thank you for hosting us. [inaudible discussion]

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